Spot gold held steady below a fresh 18-month high Wednesday, underpinned by a weak dollar but struggling to find additional momentum to break the March 2008 record high of $1,032.35 per troy ounce.
U.S. consumer price data failed to give gold an additional boost, as the figures were largely as expected, analysts said.
At 1320 GMT, spot gold was trading at $1,018.55 a troy ounce, up 1.3% on the day and just off the intraday high of $1,020.55/oz. The dollar was at $1.4684 to the euro, down from $1.4658 at 0000 GMT.
Analysts said that while further weakening in the dollar could carry gold higher, a new record high is more likely to occur in coming days.
"I would bet more that it's not going to happen today," said Standard Bank analyst Walter de Wet. "I think people are just too worried to buy at these levels, (although) most people don't want to short the market."
The dollar's sharp slide against the euro was the impetus for Wednesday's rally in gold, which had been struggling to hold above $1,000/oz.
Analysts attributed the dollar's weakness to Federal Reserve chairman Ben Bernanke's comment Tuesday that the U.S. recession had ended.
The comment boosted equity markets and risk appetite, while pressuring the dollar, said James Moore, an analyst at TheBullionDesk in a report Wednesday.
De Wet said the rapid decline in dollar against the euro makes it likely the euro will reach $1.50 much earlier than forecasted, a bullish factor for gold prices.
If gold struggles to push above $1,020 later Wednesday, some longs may book profits on the day's rally before reentering at a lower level, said a London-based trader.
"We've had quite a big move from yesterday," the trader said. But he added, with few large shorts in the market and no obvious signs of scrap selling, the medium-term direction is clearly higher. "The buying still seems to be coming in." Other precious metals were sharply higher as well. Spot silver rose 2.1% to $17.337/oz, spot platinum was up 0.8% at $1,333/oz and spot palladium was 1.4% higher at $295/oz.
Platinum jumped 2.5% overnight from Tuesday's low to a near one-year high as speculators bought platinum on dollar weakness, said Commerzbank platinum trader Rory McVeigh in Luxembourg. "It's gone a bit crazy overnight. A $40 move overnight is a bit ambitious."
The physical platinum market remained relatively immune to the rally, with physical sponge still trading at a discount to spot prices, indicating buyers aren't worried about a shortage of platinum, he said.
McVeigh said next resistance for platinum lies at $1,380/oz, and support should around $1,308-$1,312/oz.
